For 2011, there are several laws that will be affecting real estate in California and for those home owners and agents involved in short sales, California Senate Bill (SB) 931 will go into effect Jan 1 2011.
The gist of SB 931 is the following: the lender in 1st position can no longer make you liable for the deficiency balance of the loan (purchase money or refinance) of a residential 1 to 4 unit property.
This bill is really nothing earth shattering and it just pours into law what was already common practice by banks. Considering that the vast majority of short sales are non-judicial (aka trustee sale) and the fact that Calfornia is a one action state as far as remedies to foreclosure made that there wasn’t a problem with banks wanting to pursue the borrowers of 1st mortgages for the deficiency.
This law does not apply to 2nd loans, whether purchase money or refi.
Overall SB 931 is underwhelming but I guess any step forward is a good one.
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Tagged with: california • deficiency • deficiency balance • SB 931 • short sale
Filed under: short sale
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